Report: Renewables best way to deal with inflation

The expansion of solar and wind generation in Europe—total generation in Europe went up 13 percent between March and September—saved EU countries €11bn, or eight billion cubic metres (bcm) in additional gas imports.

In total, Europe generated 345 TWh of wind and solar power in these months, replacing 70bcm of gas—resulting in total savings of €99bn.

The findings came as part of Ember's Global Electricity Mid-Year Insights for 2022, published on Monday (17 October).

"Wind and solar are proving themselves," senior Ember analyst Małgorzat Wiatros-Motyka wrote. "The first step to ending the grip of expensive and polluting fossil fuels is to build enough clean power to meet the world's growing appetite for electricity."

European demand will outstrip global supply for years. The EU should resist the urge to invest in new gas projects as they will not solve high prices in the next few years and risk an oversupply of gas in the long run.

Instead, the report calls on the EU to expand all existing renewable programmes.

Renewable energy saves money

To make the case, the researchers show how speedily renewable projects can reduce gas dependence.

Nineteen of the EU's 27 member states increased wind and solar generation this year. Wind and solar power now make up 24 percent of the bloc's electricity mix.

Poland saw its share of wind- and solar power grow by 48.5 percent in one year, a European record. Spain replaced €1.7bn worth of gas imports in only four months.

And Portugal, Denmark, Austria and the Netherlands are planning to generate nearly 100 percent of electricity from renewables by 2030.

But many EU member countries are still grappling with a historical dependency on imported Russian gas, which made up 41 percent of all imported gas in 2020.

Ember researchers warn gas made up 20 percent of European electricity generation, at the cost of €82bn—a figure that has increased since last year as some countries were forced to replace low hydro- and nuclear output with electricity derived from gas.

Energy inflation

This replacement has put further pressure on inflation.

Russia's gas cut-off has resulted in the "largest inflationary shock in Europe since the Second World War, beating that of the oil crisis in the 1970s", the report said. Energy costs were 40 percent higher in September than a year ago.

Most European governments have announced support schemes to protect households and businesses against high prices. But the report warns this will not be financially sustainable for the long term and instead calls on EU governments to "address the underlying cause of inflation" and double down on wind- and solar energy.

The commission in May presented a proposal to increase the share of renewables from 40 to 45 percent of the total energy mix in 2030. The EU Parliament has already supported the proposal, but the council of 27 member states is yet to do so.

To deal with high gas prices "and calm the [gas] markets" in the "next three winter seasons", the report calls on the EU Council to back the higher target and reduce gas imports by 41 percent by 2030.